Business Faculty Summer Project
Business Faculty Summer Project
Tesco’s fall from Grace
The following activities are recommended before starting Business Team courses at New College.
Click on the Links below which will take you to useful articles. After reading them, have a go at the written task that follows:
Tesco – Where it went wrong:
Profit Rigging:
Tesco goes stale:
A new Finance Chief:
September 2014
Tesco – a strength would be the data on customer purchases gathered by Clubcards, whilst a weakness might be the failed operation in the United States. As the UK market was saturated, Tesco’s managers hoped to gain higher returns on capital from its new ‘Fresh and Easy’ stores. A scarce resource, capital was diverted from investment in the UK market.
There are hints about external threats from more nimble competitors, decisions by Amazon, Lidl et al; but it stills enjoys a significantly larger market share of the UK’s grocery market than its nearest rivals.
If there was proof of fraudulent behavior, politicians and regulatory bodies might be willing to take action. It might lead to changes in accounting standards on how income and cost flows are booked. Politicians may wonder if the ‘Big Four’ accounting firms should be broken up.
The present sorry mess highlights the different degrees of power between stakeholders in Test – managers and shareholders; the firm and multinational suppliers like PepsiCo; Tesco and SMEs; Tesco and its accountants PWC.
Consider the controversy surrounding Tesco last year reporting its profits wrongly and the realization that it wasn’t doing as well as thought.
Answer one of the following questions according to which subject you plan to study.
- Business Studies – How does Tesco’s marketing strategy need to change to improve its damaged reputation and sales?
- Economics – What changes have there been in the UK food retailing market in the last ten years? How much of this is due to new entrants in the market and how much is due to the effects of the recent recession?
- Accounting – Why is it important that companies present their accounts and profits in a ‘true and fair manner’? Detail the effects on Tesco when this didn’t happen to the satisfaction of shareholders.
- Financial Studies – Why does Tesco think it can offer Financial Services through its supermarkets? What advantages and disadvantages does Tesco have over traditional banks?
- Law – What are the legal obligations of Tesco when selling products and services to customers?
